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Many small and medium size organisations whether they be directly in the software development business or engaged in other corporate activities are experiencing similar problems when it comes to their IT Strategy.

For the software vendor it is a question of how do I excite the market with new innovations while ensuring what I have delivered to my current customers is and continues to meet their needs. For the enterprise IT organisation it is a need to deliver new innovative solutions to the business while ensuring a high level quality of service for those solutions already deployed. In this way the problems are similar and are superbly illustrated by the work of Jack Calhoun in his quadrant view of the organisation.

One goal is customer experience excellence, while the other is operational excellence but it is not possible to achieve these in tandem and therefore one needs to pick a route.

However, while one is able to aspire to these heights and indeed in some cases achieve them it is all too often that this happens as a “point in time” achievement. The real question is once you get here (or better, as you plan the journey), how do you continue to improve or at least maintain this status rather than fall back down? For this is often what happens and in many cases the finger points back to the technology and that where IT once drove growth it now impedes change.

The missing ingredient here is that these goals are set without a view of sustainability and this is where IT has a trump card to play and by doing so not only can IT enable organisations to achieve customer experience and operational excellence, it maintain this status into the future. So what is this ingredient? Quite simply it is AGILITY!

One of the key things software development have learnt over the years is the cost of innovation and dramatic cost of rapid innovation. As they argue successfully in their “implementing lean software development” book, Mary and Tom Poppendieck, state that “the cost of complexity is not linear, it’s exponential”. Wise software developers, they say “place a top priority on keeping their code base simple, clean and small”.

By developing agile software development practices that are light touch, expect and embrace change and are focused on delivering value it has allowed developers to invest much more wisely in response to challenges set by the business. However, although the successes have been widespread and repeatable so far the true notion of agility has not managed to move out much past the world of Software development itself.

Many argue wrongly that agile practices only works at small scale, that it is not rigorous or works at the expense of architecture and quality. These are wholly incorrect but do much to limit the values of agility from being expressed more widely across IT.

In the meantime, for those that have managed to harness the power of agility at scale, the successes are multi-fold enabling IT to build a much more focused business model in delivering services to their customers and in so doing ensuring a growth in operational and customer experience excellence, aka quality of service.

After 5 great years of fun at Microsoft UK it’s time for me to say so long as I move on to new things although I fully expect to remain part of the Microsoft ecosystem and still haunt the corridors of the UK Campus from time to time!

So what does a Microsoft Architect do after Microsoft? Well more architecture it seems from the business through to its people and the systems the use. There are actually three main strands to my post-Microsoft strategy that I’ll summarise below:

As you may know I’ve had a long history with IASA, especially here in the UK where I founded and have chaired the UK chapter for around 6 years now. During this time we’ve been developing a credible and sustainable education and certification program for IT architects and now, along with my colleagues at IASA, I want to bring this to Europe. We’re holding our next UK certification boards this November but the plans for IASA Europe are much bigger than just this.

inTHiNK! is the name of my new professional services practice www.inthink.co.uk. inTHiNK! will offer services from business & technology strategy, architecture practice and guidance through to cloud readiness and enablement. This will scale out through an extensive associate network of solid top-level IT professionals. Contact info@inthink.co.uk if you want to follow up.

As a brand new bizspark partner I will be seeking to exploit the value of the Azure platform delivering a new breed of SaaS enablers and business offerings to the market!

A story of cloud awareness

This is the story of the Banker and the Pig. It is not based on any specific single reality but on the collection of many factors. It’s based on the presentation I prepared called Unbundling the bank.

”Oh no!”, says the (fictional) Banker (not related to any actual banker I have met!) on seeing the initial slides from the Unbundling the Bank presentation.

“We live in a multi-sourced, software+service (Hybrid Cloud) world!”

”We just didn’t know it!”

”But hold on”

”Isn’t SOA dead?”

”Didn’t SOA fail to deliver a return on investment (ROI)?”

“And anyway, we’re too silo’d and project and opportunity driven to consider adding cloud to the mix too!” the Banker concludes, almost looking a little relieved.

“Ah yes, but the problem isn’t with SOA it’s with the SOA Junkies!” says the Pig.

“The SOA Junkies?” shrieks the Banker!

“Yes” says the Pig calmly.

“They think too much like Adam Smith with his division of labour and Henry Ford with his assembly line! They’re too Task oriented!”

“They think in terms of the Separation of Concerns, abstractions, and ah … yes Re-Use, the magical holy grail of Re-use!” continues the Pig.

“How many times have we tried to deliver the ‘Single view of the Customer?’” asks the Pig rhetorically!

“These approaches just breed more complexity and like the forth bridge, never end, adding little if any business value as a consequence. All they do is pile on the technical debt from which IT slowly suffocates” remarks the Pig.

“The problem is that the approach is based on technology principles instead of the principles of business!”

“We need to look above the ‘HOW’; above the layers of people, process and especially the technology.”

“We need to focus on instead, on the ‘WHAT’ instead! We need to map the enterprise that describe its Business Capabilities. These encapsulate the people, process and technology, and unlike these things, capabilities are stable, unchanging, self-contained, measurable and above all value-oriented in relation to the business.”

“Oh!”, says the Banker!

What is an Enterprise?

“So let’s step back for a moment” says the Pig “and ask ourselves, what is the Enterprise?”

“Obviously, there are customers, one hopes! And then there are the Business partners, but what is actually inside that box we call the enterprise?”

The Banker is puzzled.

“Well I’ll tell you”, says the Pig, “It’s interesting, but from a capability perspective enterprises look remarkably similar to each other!”

“Ugh?” snorts the Banker.

“Looking at an enterprise’s capabilities at the top most level and we can see a regular pattern of capabilities that occur in all enterprises.”

“Firstly, there is a capability to plan new products and services.”

“Next, there is the capability to develop these new products or services”

“Third, there is create demand for these new products and services”

“And finally there is the need to Fulfil the delivery of these products and services. Simple, but amazing in the same way.” says the Pig with an air of triumph.

“All there is to an enterprise is simply Plan, Develop, Demand and Fulfil! Oh and add to this Collaborate too and that’s it; the 5 core capabilities that every enterprise or business has!”

“But hold on this can’t be all there is to it, surely!” questions a rather bemused looking Banker.

“Well of course not!” chuckles the Pig, “Each of these capabilities contains 1 to many sub-capabilities and these then contain more capabilities within them! So far we’ve taken capabilities down 5 levels and it still amazes me that this model holds true across the vast majority of enterprises we’ve seen!”

“Of course, there is variance, but there is about a 70% recurrence of these capabilities, even down to level 5, across enterprises, and across verticals!”

Silence.

“Ah how I love patterns” sighs the Pig looking upward as if to look for some hidden force.

The New Model Enterprise

“Ok, ok, so this is all very good” says the Banker, a little impatiently. “I can see that this is all very nice and pretty, but there’s devil in the details of those little capabilities!”

“There’s still the problem with the HOW!”

“Ah yes”, says the pig, nodding his head knowingly.

“Because these capabilities are stable, well defined and measurable, you can ask questions of them, value-oriented questions like, ‘what’s your value to the business?’ and ‘How healthy are you?’”.

“From the answers you get back you can produce a heat map of the enterprise that will give you a view of the health of your enterprise and more over where to focus your efforts in drilling down into the capabilities below, to find out what really is at fault and where to prioritise your efforts!”

“You can do this as a light-touch mapping across the enterprise and only drill down on the areas that flag up through the heat maps. Making it and efficient process”

“Ahhh” says the Banker, relaxing his facial expression slightly for the first time.

“But here’s the thing …” whispers the pig, leaning forward as if to ensure that this is for the Bankers ears only.

“Capabilities allow you to decompose the enterprise into discrete self contained units of specialisation, in so doing you can differentiate between the ones you care about; that creat value, and the ones you don’t.”

“You can then think about unbundling yourself from the cost of managing and maintaining these yourself.”

You can plan to move these away from a ‘bespoke’ internalised model to that of a more ‘standardised’ model.”

“Think of these capabilities as being like mini-enterprises all neat and self-governing and that the HOW might not need to be your problem at all” the Pig Winked.

“Oooh” says the Banker, his eyes widening, but this time less in shock and more in anticipation.

“A suite of mini-enterprises doing stuff themselves, but collaborating to deliver a bigger result than they can do themselves. Some may even deliver their capability to another enterprise in time. This happens already if you consider the SaaS applications you are using today!”

“Furthermore, you can create new dynamic specialised capabilities and build them in the model of being a mini enterprise, able to persist on their own, without the layers of management that the models of the industrial era would and do enforce.”

“One day, like others before them, these once innovations, now commodity capabilities could be set free to find other consumers or markets and maintain their own innovation edge.”

“Now you have unlocked a new kind of strategy strategy; that of the New Model Enterprise (NME) based on Business Service Centric Principles!”

“And you can start to take advantage of the multi-sourced Software + Service (Hybrid Cloud) that you know we already live in.”

“Oh my!” gasps the Banker!

“Don’t believe me?” asks the Pig?

“Hmmm?” questions the Banker.

“Just go and ask the other banks …” said the Pig.

And with a nonchalant flick his tail, the Pig hoped off the Bankers head and returned to his glorious mud bath.

After all it really was the most splendid weather for the time of year!

The End.

Supporting Information

It’s interesting to note from Joe Mckendrick’s, SOA’s Dead, long Live Services blog that Gartner suggest SaaS doesn’t equal as much as 1% of enterprise IT Budget spend. But as Joe comments, the market seems healthy enough and it’s worth looking at some of Ray Wang’s numbers who reports that “SaaS vendors kept steady growth in the double digits”.

The other night I tried my hand at a 5 minute cloudcamp presentation which was mad and to be honest didn’t go according to plan! But hey I’ve put all that down to life-long-learning now and in probably talking to the wrong audience!

Below is the deck I presented and for some most baffling reason, that I can’t explain, the deck centres on a conversation between a very scared banker and a pig on his head!

I came across it while hunting for images of banks and it made me really laugh at the time, but unfortunately I think it bombed a little on the day – no one (especially the OSS crowd) likes a guy from Microsoft trying to be funny – I had that feeling of the stand-up comedian confronted with silence once he’s delivered his best line! Urgh, the memory makes my skin crawl!

That said, I like the story and while the slides are great (of course;)!) I’ve had a go re-telling the story in a little more detail which I hope you’ll find fun and maybe even useful! You never know! This will follow as a separate post but in preparation here’s some background followed by the deck itself.

Some background

The title for the session came to me as you’ll know if you’re a regular to my blog, from the post I did the previous week that referenced an original post I did back in 2007 after seeing a session at QCon from Chris Swan and Craig Heimark. It came back to me a week or so ago when I got to talk to a group of around 30 Enterprise Architects for a large UK Bank. For too many the thought of using cloud was almost abhorrent and you could almost feel them each mouthing the words that “our bank will never use the cloud!”.

However, I had an ace up my sleeve being able to show, even back in 2008 through the work I did with Freeform Dynamics calledIT on the front footthat Financial Services were among the leading adopters of Software as a Service (SaaS) at the time (remember the phrase cloud had not come to the fore at this time).

But what was perhaps more interesting was that contrary to popular belief, SaaS adoption is far more significant where IT is seen as a strategic advantage to the business. Most, especially many of the SaaS vendors wrongly argue that it’s an opportunity for business to bypass IT and focus their efforts on that of converting the business executives, avoiding what in reality could be a quicker route through IT itself. It is clear that with the early adopters, success has very much depended on IT being involved and potentially driving the agenda. To support this, it is increasingly the case as you listen to early Cloud adopters from IT who talk of the need to convince the business of the benefits of cloud versus the risks.

The final graph from the report I used shows that in the majority of cases SaaS adoption only takes place where there is a commitment to Service Oriented Architecture (SOA)! This makes sense given the obvious concerns over storing data external to the organisation. An Enterprise that has a strategic position on Integration is clearly able to take advantage of the resultant hybrid model that must naturally follow.

Just over 2 years ago I first wrote the post entitled “unbundling the bank” and hear I am finding myself planning a talk at CloudCamp next week entitled the same! The title, I thought, came to me earlier this week when I had chance to visit a team of Enterprise Architects at a large UK bank. I was sure the title was not “original” and came from somewhere, so you can imagine my surprise when I did the necessary search and my blog came out on top – lol!

What I really love though – is that the thoughts are just the same, the evidence however continues to mount, pointing towards the further differentiation of IT, but increasingly of the business itself, from “centralised vertical models to decentralised models made up of “single value specialists”.

Unlike my talk to bankers back in 2007, this time, the EAs are thinking about the implications of cloud and software+Services more seriously, and while most would say never, to some the light bulb is on and the opportunity for disruption is imminent!

One thing I really liked and had forgotten about the talk by Craig Heimark back in 2007 is the drive to “create increased value to the consumer at the expense of the margins; the higher the volumes the lower the margin” which to my mind reads “commoditisation”.

In the old world view of innovation, it would make sense to keep this closed or hidden, to maintain ones market lead at the expense of competition. Thereby keeping margins high.However, in an open innovation model the race to commoditise is high, Keeping margins low to avoid competition and drive to mass market appeal and therefore scale quickly. If an innovation does not scale in terms of consumer appeal then it’s not an innovation worth pursuing.

Although, it takes time for shift to happen, there are examples all over of this taking place. Below is a list of common occurrences that may take place in isolation or combination but are enablers in moving towards a more “composite enterprise”. I’ve covered some of these previously so some repetition might arise.

Rise of Multi-sourcing

As discussed previously. Enterprises that have outsourced are actively re-insourcing, but in so doing they are differentiating between what comes in and what stays out. The latter are often non-differentiating or commodity, but by going through this process the results seldom remain with the encumbent outsourcer but move to new specialists.

Service Provider Convergence

The traditional models of software suppliers like system integrators, outsourcers and ISVs are converging. The SI is moving away from delivery of bespoke software to the delivery of bespoke services, software no longer lands inside the organisation’s datacentre but is automatically outsourced by the integrator. The integrator has a shared risk-reward with the customer – they are innovation partners with a desire to grow the market of the service itself, not just the value it itself fulfils.

Delivering Innovation as a business

Many enterprises are project-driven, but this is a mis-understanding, it is more that they are project-organised, they are in fact innovation or opportunity driven. The problem is they don’t realise this due to the project-based mentality that results. By taking an innovation-driven approach it is easier to see this as a business investment and to consider creating a structure that mimics more of a business than a project. this has dramatic and profound results both in terms of outcomes, but also to the people involved, the processes they create and the resultant capability that they generate.

Innovation Hubs

Closely related is the rise in innovation hubs or R&D centres, that incubate or provide support to new pilot innovations. This extends outside the enterprise too, to the service provider communities where a joint risk reward reduces up front costs of innovation in favour of longer term commitment and profit, leading to the model of collaborative innovation between partners.

Rise of the new COTS Service

A great example of the re-rise of COTS (Service) is the growth, adoption and subsequent mass-customisation of the large ERP systems over the late 90s and early 00s. For those that invested heavily, there is an increased growth in EA projects looking to detangle the enterprise from these investments in favour of the new COTS Services often delivered over the web as SaaS. The simple question being why customise what doesn’t differentiate? Furthermore, by taking a simplified ‘industry standard or accepted’ approach to a business problem you start to create the opportunity to chose who delivers the service over time.

There is a shift happening but it’s been happening longer than many think and its effects may be larger and more significant than we at first expect.

This shift is business driven, as it strives to maintain its innovation edge ensuring that costs are reduced and ensuring it moves to a more lean and efficient model of operation. In truth , we can look back as far as Adam Smith and the division of labour in the 1700s to the origins of this shift and may therefore suggest that the shift is not really new at all. However, the old model and granularity of operations is under major pressure to change once more.

The shift is to one of Service Centricity and although it has been a long time in coming, the advancement in technology and the role of technology as an agent of change and business differentiator in the modern enterprise is rapidly moving us over the tipping point that causes us to re-evaluate the very foundations of “the enterprise” itself.

Hype and hot air!

Cloud is undoubtedly centre stage and the hype is reaching tsunami proportions. Many blame this on the vendors but while the idea has got the technology market excited I think this view deflects us from the real question of cause and effect. Is this an example of technology creating new markets or is it an example of technology reflecting the needs of existing markets? In essence it’s an element of both and as is often the case with new innovations it often causes us to view things differently which results in new ways of solving existing problems.

As such ‘Cloud’ in all its forms is set to a have a significant impact on the enterprise, but it is in delivering direct quantifiable business value that the cloud will deliver its most significant impact. If you think of cloud simply in terms of utility computing or dynamic provisioning of infrastructure then the point of cloud and its significance may pass you by.

I want your solution not your software

The impact of cloud is already visible across the enterprise today in the endemic use of Software as a Service (SaaS) Solutions at least somewhere within the enterprise and it is not that this is something that just happened overnight but has certainly been growing over the past 5 or so years. Many Independent Software Vendors (ISVs) cite that customers want but don’t want to burden IT. They ask if they can prototype the solution hosted by the ISV. The solution seldom ends up coming in house. One ISV recalled a customer saying “we want your solution, but we don’t want your software”. The issue for the ISV is that they are now a hoster and need infrastructure expertise, something they have little in-house skill or budget for. Cloud platforms provide these ISVs with an instant, scalable, reliable solution that they themselves would be hard press to achieve and all at a price that scales with their customers.

The dilemma for Internal IT

For Internal IT this creates a problem if done without their knowledge and its incumbent on IT to be proactive in the establishment of external services rather than representing a obstacle which will only be seen as holding the enterprise back. Taking a lead on these fronts is where IT can achieve the best results, providing vendor selection services to streamline the process and actually becoming the agent of adoption promoting well governed use of services across the enterprise.

Rise of multi-sourcing

The impact of cloud is not exclusive to the ISV or Internal IT but to the very fabric of the traditional software supply chain.Today we readily recognise different roles and functions across the supply chain from ISVs, to System Integrators, Outsourcers to Offshoring but what happens to these discrete entities if we look to the deliver of services? They start to converge. If I deliver a solution as a service, then I am no longer disengaged from the customer post-sale, we’re tied together for as long as the provision the service. What of the System Integrator? The solution is no longer deployed on-premises for running in-house, but as with the ISV, it’s hosted by the SI. The relationship between consumer and supplier are tied together once more. And so it goes, an ISV looks more like an SI, an SI more like and ISV, they both are outsourcing because the solution never in-sourced. The enterprise is now no longer exclusively in-house or outsourced, but multi-sourced.

Collaborative/Shared Innovation

similar to open innovation through multi-sourcing the enterprise is seeking partnerships for the provision of business services. This is fine at the commodity level, but as one delves ever closer to core business services the need to tailor and personalise and more importantly, protect IP becomes more significant. However, here too we see developments in service centricity through the development of innovation centres and incubation hubs often maintained by the enterprise itself. This works well but is limited and often expensive to nurture. By collaborating and sharing innovation more pro-actively with service partners it is possible to drive the innovation faster, cheaper through a shared risk/reward model, thus allowing the innovation the opportunity to expand much further beyond the horizons of the parental organisation as the market opportunity evolves.

Integration as a Service

Today we see see the commodity functions of email and collaboration moving out of the enterprise at a dramatic rate. So what next? Mission critical? Core Functions? Maybe not, but by using cloud to extend or embellish these core functions and to connect and integrate with other service providers, business partners or different parts of the enterprise itself then adoption rates here too can be seen to be gathering pace.

The Business as a Service

When I think of this I am always reminded of Amazon’s Mechanical Turk which takes it’s name from an 18th century chess-playing machine that really hid a human chess master inside.This service provides human workflow services that are accessible through a web service (programmable API). If we look at the business as a set of collaborating capabilities then we can effectively define boundaries or APIs and describe what the capability does but not how it does it or who does it. This is service centricity business style. This is the “composite” business or business as a service.

Small is the new big.

None of this for you? Maybe not. But if it’s not for you then be sure it certainly is for someone and as is the way with disruptive innovation, it may come from a source much nearer home than you think. Take one person with good business domain knowledge, take one developer, take one cloud and what have you got? A business service that is reliable, scalable and available to a world of consumers at a cost that they can all afford.